PHILIPPINE COLLEGE OF SCIENCE AND TECHNOLOGY
Old Nalsian Road, Nalsian, Calasiao, Pangasinan, Philippines 2418
Tel. No. (075)522-8032/Fax No. (075)523-0894/Website: [Link]
ISO 9001:2015 CERTIFIED, Member: Philippine Association of Colleges and Universities (PACU),
Philippine Association of Maritime Institutions (PAMI)
CONTRIBUTIONS OF ENTREPRENEURSHIP IN THE PHILIPPINE ECONOMY
The national economy is composed of business enterprises, households, and the
government. These are the major sectors of the economy. The strength or weakness of
one sector affects the other sectors because of their interdependence. However, it is the
government which provides the leadership in improving the economy.
In economic development, the bottom line is the quality of the people of a given
country. Knowledge, skills and values are the main determinants of economic
growth. Needless to say, values constitute the key to economic success of any
nation. The Japanese are risk takers, hardworking and self-reliant. Such entrepreneurial
qualities have made Japan a prosperous nation. But above all, the Japanese love their
country-including its culture, traditions, institutions and products.
THE COLONIAL RULE
The Philippine became the slave of three colonial masters; Spain, United States and
Japan. For more than three centuries we were under Spanish rule, and about half a
century under the American regime. The Chinese dominated the retail trade business
even during the Spanish time.
Likewise, Japan invaded the Philippines and other Southeast Asian countries for
economic reasons. It had problems such as population explosion, shortage of raw
materials and surplus of factory products. Our economy was at its worst during the
Japanese time. Goods and services were extremely scarce. The production of sugar
stopped for lack of foreign market. As a result, inflation became very high. This was
aggravated by the printing of money by the Japanese government. Most Filipinos
starved. Rice sacks were used as clothing. The price of rice per cavan was P30 before
the war. During the Japanese time, it was P3,000.
The United States granted our political independence on July 4, 1946. Filipino’s rejoiced
and expressed their gratitude to the U.S. government, only to realize later that our
independence was not meaningful. The United States still influenced our political and
economic policies. The Americans imposed the Bell Trade Act of 1946. This gave the
American businessmen the right to exploit our natural resources to operate public utilities
and other businesses, and to enjoy the pre-war free-trade agreement. The Philippine
government accepted the Bell Trade Act in exchange for war damage payment.
The Role of Entrepreneurship in Economic Development
There are various definitions of entrepreneurship. However, the key concept is
INNOVATION. This refer to new or different ways of doing things, like technology,
marketing, human relations, management, and so forth. When an individual creates a
new product, it is innovation. When he sells his product in a new approach, it is also
innovation.
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PHILIPPINE COLLEGE OF SCIENCE AND TECHNOLOGY
Old Nalsian Road, Nalsian, Calasiao, Pangasinan, Philippines 2418
Tel. No. (075)522-8032/Fax No. (075)523-0894/Website: [Link]
ISO 9001:2015 CERTIFIED, Member: Philippine Association of Colleges and Universities (PACU),
Philippine Association of Maritime Institutions (PAMI)
Entrepreneurship in the Philippines
In the Philippines, entrepreneurship is viewed as important to empowering the poor,
enhancing production, and as an impetus to innovation. The 1987 Philippine Constitution
recognizes entrepreneurship as an engine of economic growth. Article XII Section 1
highlights the role of private enterprises in supporting equitable distribution of income and
wealth, sustaining production of goods and services and expanding productivity, therefore
raising the quality of life.
The Philippine Development Plan (PDP) further reinforces the thrust on entrepreneurship
through trade and investment to achieve the government’s goal of economic development
and job creation. Based on the plan, measures for macro-economic stability, employment,
trade and investment, agribusiness, power-sector reforms, infrastructure, competition,
science and technology, and anti-corruption are being pursued to strengthen Philippines’s
competitiveness and contribute to job creation.
In 2011, there were approximately 830,000 business enterprises in the Philippines. Of
these, 99.6 percent are classified as micro, small, and medium sized enterprises (MSME)
which are responsible for 38 percent of total job growth.
Economic Development and Growth Explained
Development is a process while growth is a product. So, growth is a result of
development. In agriculture, the application of fertilizers, insecticides, labor, machines
and other productive inputs represents a process or development. The results or outputs
are crops like corn, rice, or sugar. In simple terms, development is input while growth is
the output.
Development and Growth Theories
Laissez Faire Theory- this theory explains that the government should not interfere in
economic activities. It is absolutely free- enterprise economy. The role of the government
is only confined in education, justice and public works.
Keynesian Theory- The government should play the key role in economic development,
particularly in less developed countries, or those with depressed economic
conditions. This theory contends that during economic depression the government
should put up massive public works, like construction of roads and bridges, other labor-
intensive projects. These generate large-scale employment resulting to more incomes to
more people.
Ricardian Theory- This is the theory of David Ricardo, an English classical economist. He
believes that the key factor in economic growth is land. This means that agriculture plays
a major role in economic development.
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PHILIPPINE COLLEGE OF SCIENCE AND TECHNOLOGY
Old Nalsian Road, Nalsian, Calasiao, Pangasinan, Philippines 2418
Tel. No. (075)522-8032/Fax No. (075)523-0894/Website: [Link]
ISO 9001:2015 CERTIFIED, Member: Philippine Association of Colleges and Universities (PACU),
Philippine Association of Maritime Institutions (PAMI)
Harrod-Domar Theory- This was conceptualized by Sir Harrod of England and Professor
Domar of United States. The key factor in economic growth is physical capital like
machines. The theory claims that more products can be produced through the use of
machines.
Kaldor Theory- Nicholas Kaldor maintains that the key factor is technology. The theory
explains that the application of modern technology in the production of goods and
services has been responsible for the economic success of the highly developed
countries like United States, Japan, Great Britain, France, Italy, and Germany.
Innovation Theory- This was developed by Joseph Schumpeter. He stresses the role of
innovators or entrepreneurs in economic development. Schumpeter says that it is the
innovator who has the courage and imagination to handle old systems, and be able to
transform the theory into reality. It is the innovator who introduces change for the better.
Non-Economic Theories- There are several other theories which are non-economic in
nature. Their key factors are political stability, efficient public administration, open
society, and positive cultural values.
The Importance of Entrepreneurship
Statistics in both rich and poor countries show that small enterprises are leading in the
generation of jobs and wealth. In the Philippines, most of our economic activities fall
under the micro and small business categories. There are many retailers, vendors, and
other small sole proprietors.
“The Harvard Business School is beginning to see that its role is not just training general
managers, but also training and providing preparation for people to start their own
business… It is a kind of a new freedom to go out and take some risks and run your own
show… It’s a kind of a new frontier for people of some boldness and creativity.”
Contributions of Entrepreneurs
Develop new markets (the modern concept of marketing, markets are people who are
willing and able to satisfy their needs)
Discover new sources of materials (entrepreneurs are never satisfied with traditional or
existing sources of materials)
Mobilize capital resources (entrepreneurs are the organizers and coordinators of the
major factors of production, such as land, labor, and capital. They properly mix these
factors of production to create goods and services)
Introduce new technologies, new industries and new products (aside from being
innovators and reasonable risk takers, entrepreneurs take advantage of business
Page 3 of 7
PHILIPPINE COLLEGE OF SCIENCE AND TECHNOLOGY
Old Nalsian Road, Nalsian, Calasiao, Pangasinan, Philippines 2418
Tel. No. (075)522-8032/Fax No. (075)523-0894/Website: [Link]
ISO 9001:2015 CERTIFIED, Member: Philippine Association of Colleges and Universities (PACU),
Philippine Association of Maritime Institutions (PAMI)
opportunities, and transform these into profits. So, they introduce something new or
something different.)
Create employment (the biggest employer is the private business sector. Millions of jobs
are provided by factories, service industries, agricultural enterprises, and the numerous
small-scale businesses.
The Government and Entrepreneurship
In underdeveloped countries, the government plays a major and active role in economic
development. Aside from setting up the economic infrastructures, like roads, bridges,
transportation, communication and electric facilities, the government is directly involved
in business and industry where the private business sector has no or inadequate
investment.
Although, entrepreneurs are risk takers, self-reliant, and optimistic, there are factors
which encourage or discourage them to invest. Obviously, the primary factor or
determinant of investment is profit. It is very clear, therefore, that there is a very strong
and direct relationship between the government and entrepreneurship. It is the
government that provides the basic incentives to entrepreneurship. In return,
entrepreneurship accelerates economic development through more employment,
production and consumption. Precisely, this is the goal of government for the people.
Determinants of Investment
Profit is the first consideration in investment. It is profit that stimulates businessmen to
go into business.
The Role of The Government
During the 1700’s in Europe, particularly England, the Laissez Faire system of
government was practiced. The non-interference of the government in economic
activities led to the growth of capitalism. The capitalists, however, abused their powers
and privileges. They exploited their workers in terms of low wages and long hours of
work, usually 17 hours a day. They also paid very low prices for the raw materials
produced by farmers. These miserable situations happened during the height of the
Industrial Revolution in England. The role of the government is to promote the welfare
for all sectors-producers, consumers, employees, businessmen and the rest of the society
and the economy. It is of course, difficult to strike a happy balance of support among all
members of society. But a good government always considers social justice as a basic
yardstick in public administration.
The Philippines is a highly entrepreneurial country. The main reason that drives its
entrepreneur spirit is its poverty. Small and medium-sized enterprises (SME) account for
the largest share of Philippine entrepreneurs. SMEs, including micro-enterprises, account
for 99 percent of all business establishments and 60 percent of the exporting firms in the
Philippines. SMEs currently employ about 55 percent of the Philippine labor force and
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PHILIPPINE COLLEGE OF SCIENCE AND TECHNOLOGY
Old Nalsian Road, Nalsian, Calasiao, Pangasinan, Philippines 2418
Tel. No. (075)522-8032/Fax No. (075)523-0894/Website: [Link]
ISO 9001:2015 CERTIFIED, Member: Philippine Association of Colleges and Universities (PACU),
Philippine Association of Maritime Institutions (PAMI)
contribute 30 percent to total domestic volume sales. Women hold significant leadership
positions in national and local government, universities, business corporations and family
business enterprises in the Philippines. 51% of entrepreneurs in Philippines are female.
Challenges for entrepreneurs in Philippines include a lack of research and development,
inadequate access to technology, financing—most entrepreneurs starting small business
in the Philippines have difficulty acquiring capital, a lack of marketing advice and logistical
problems.
The Philippines government sees that Entrepreneurial efforts will help ignite economic
growth, improve living standards, and build a worldwide market for Philippine products so
they welcome foreign investors and offer incentive and support by lowering tariffs,
opening its entire economy, including land ownership and “free trade.”
Government Assistance Program
1. Peace and order
2. Political stability
3. Price stability
4. Taxes
5. Infrastructures
6. Education and training
7. Public administration
8. Production technology
9. Marketing assistance
10. Financial assistance
Primer: Magna Carta for Small Enterprises
1. What is R.A. 6977, otherwise known as the magna carta for small enterprises?
R.A. 6977, signed on 1991 January 24, is an act to promote, developed and assist small
and medium scale enterprises (SMEs) through the creation of a Small and Medium
Enterprise Development (SMED) Council, the establishment of a Small Business
Guarantee and Finance Corporation (SBGFC), the mandatory allocation of credit
resources to small enterprises and the rationalization of government assistance programs
and agencies concerned with the development of SMEs.
2. Who will benefit from the magna carta for small enterprises?
Small and medium enterprises will benefit from the Magna Carta for Small Enterprises
3. What is small and medium enterprise?
A small and medium enterprise is defined as any business activity or enterprise engaged
in the industry, agribusiness and/or services, whether single proprietorship, partnership
or corporation whose total assets, inclusive of those arising from loans but exclusive of
the land on which the particular business entity’s office, plant and equipment are situated,
must have value falling under the following categories:
Page 5 of 7
PHILIPPINE COLLEGE OF SCIENCE AND TECHNOLOGY
Old Nalsian Road, Nalsian, Calasiao, Pangasinan, Philippines 2418
Tel. No. (075)522-8032/Fax No. (075)523-0894/Website: [Link]
ISO 9001:2015 CERTIFIED, Member: Philippine Association of Colleges and Universities (PACU),
Philippine Association of Maritime Institutions (PAMI)
Type of Enterprise Capital
Micro less than Php50,000.00
Cottage Php50,001.00 up to Php500,000.00
Small Php500,001.00 up to Php5,000,000.00
Medium Php5,000,001.00 up to Php20,000,000.00
4. What is the small and medium enterprise development council?
The council shall be the primary agency responsible for the promotion, growth and
development of SMEs in the country by way of facilitating and closely coordinating
national efforts to promote the viability and growth of SMEs, including assisting relevant
agencies in the tapping of local and foreign funds for SME development, as well as
promoting the use of existing guarantee programs.
Types of SME Skills Training Offered by The Government
Meat Processing Salt and tile making
Fish Processing Basic Carpentry Training
Peanut Processing Skills Training on Rope Making
Wine and Vinegar Processing Bamboo Craft (basketry)
Mango Chip Processing Embroidery
Skills upgrading on knitting (paghahabi) Soft Broom Making
Skills upgrading on Leather craft Stuffed toy Training
Skills upgrading of Shell Craft Sawali making
Skills upgrading on Ceramics Loom Weaving (machine)
Skills upgrading on Pottery Clay Hollow block Making
Skills upgrading on Banacbac Handicrafts Seagrass Basketry
Skills upgrading on Coco-Midribs Handicrafts Rattan Basketry
Chalk Making Christmas Décor Making
Bamboo Furniture Training Fruit Processing
Duck Raising and Hatchery Candle Making
Speed Sewing Banana Processing
Types of SME Management Training
Simplified Bookkeeping Improve Your Business Training
Financial Management Symposium on Livelihood Projects
Business Management Starting a Small Business
Marketing Management Subcontracting with Exporters
Production Management Organizing a Corporation
Product Planning and Development Value Formation Seminar
Furniture Business Development Teambuilding
Strategic Marketing Store Design/Merchandising
Product costing and Pricing Effective Time Management
Basic of Exporting Leadership Training for Farmer Leaders
Consumer Education Management Extension and
Productivity Quality Improvement Consultancy
Page 6 of 7
PHILIPPINE COLLEGE OF SCIENCE AND TECHNOLOGY
Old Nalsian Road, Nalsian, Calasiao, Pangasinan, Philippines 2418
Tel. No. (075)522-8032/Fax No. (075)523-0894/Website: [Link]
ISO 9001:2015 CERTIFIED, Member: Philippine Association of Colleges and Universities (PACU),
Philippine Association of Maritime Institutions (PAMI)
Advertising and Promotion Seminar on Bookkeeping and
How to get started in Exports Accounting
How to negotiate with Buyers Seminar on Management & Simple
Exports Management Bookkeeping
Entrepreneurship Development Seminar Cooperative Management and Simple
Bookkeeping
Nurturing the Entrepreneurship Paradigm
Entrepreneurship is more than just an economic term - it is a way of thinking. Creating
jobs, empowering people, and giving individuals access to better lives for themselves and
their children is a wonderful gift. Today, it has become a dynamic, developing part of the
economy promoting inclusive growth. Entrepreneurship is a way of inspiring creative
individuals to pursue opportunities despite its risks.
In closing, the challenge for countries like the Philippines is to accelerate both the political
and economic leadership that can muster social reforms through entrepreneurship.
Entrepreneurs have the power to achieve great things. Entrepreneurs will emerge as the
well-oiled wheels that will keep the economy going and the society efficiently running.
Supplemental Readings:
[Link]
challenges-inclusive-growth
[Link]
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